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Equities Rolling Over As Treasury Belly Punching Continues - Post-POMO Update
UPDATE: As POMO ended, Treasuries took a rapid leg higher in yields (and equities gave up their bounce)...
The overnight 'China didn't explode and Japanese stocks gapped higher magically' rally in stocks is gone... The selling continues - even as Treasuries remain a little more quiet than the last few days. Bonds are seeing 5Y and 7Y (the belly) still sold even as the long-dated 30Y is modestly bid. Homebuilders are getting monkey-hammered - now down 9.5% from pre-FOMC levels. There was some bid in HY (CDS) credit this morning but chatter is that we are seeing the much-warned-about selling of high-yield bonds (as opposed to lifting of hedges alone) - which perhaps explains the moves in longer-dated Treasuries as spread-based money managers unwind. Oil prices are rolling over fast as the USD rallies on the back of EUR weakness (Greece among other things) but Gold and Silver are bouncing. Financial CDS are now wider on the year - dramatically dislocated from financial stocks. It seems the 100DMA (1567) and previous all-time highs (1576) are the next supports.
Financial stocks are grossly dislocated from their credits...
Builders go from weakness to weakness...
as Stock indices bleed back to lows...
Charts:Bloomberg
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Equities will be ok..precious metal holders been torched though
Welcome back Trav.
Dippity Doo Daaaah
How about we talk in absolutes: Gold has been torched and equities have been better than ok. Of course I am sure Zero Hedge will come out and tell me that bonds will not, will not, rotate out of equities, god will be worth $55k, and WWIII is imminent.
Hear Hear.
"better than ok"
Now that's talking in absolutes, my friend.
Cust: "Hey Mr. Broker, how do things look? Should I transfer that $50K from financials in light of yesterday and put it in large caps? What do you forecast if I do?"
Hero: "Your gains will be better than ok."
Cust: "Thanks. That's awesome and I appreciate your professionalism."
lmao
I wrote in past tense because equities have been ok. And gold has been blowtorched.
And brokers can't promise gains.
"Gold has been torched and equities have been better than ok."
Why do you think this has occurred, and what can we learn from it? Also, what do you recommend buying from this point going forward?
A new pattern is emerging here at ZH. Not sure if they are trolls, sock puppets or both. I'm seeing lots of them, that's all I know.
Like this guy Clam. He has been here 1 year and 43 weeks yet just started posting two days ago and all his posts are gold bashing comments.
Cf. Market tops at the margin.
http://www.zerohedge.com/news/2013-06-20/market-tops-form-margin
At least MillionDollarBonus has been on it for a while and damn successful if he was in the Dow, hypothetically. Clam et. al. are emboldened by the stadium roar.
Torched Trav, what a loser....
Thanks for the Clam's-eye view, but you might try opening the shell next time!
Or else just...clam up? ;^)
Great charts, though I thought we'd bounce off the first pivot down, so I closed out my short, and (as of this second) it looks like it may be happening. Still, when volatility is this high, things always go farther than you think, so it's best to let the technicals reign -- thus, I may end up kicking myself. I just get the feeling those in charge will want us to end the day close to unchanged, or within +/-+ 40 Dow points.
EP...I love your posts. However, I think one thing you are missing in your last one is that "those in charge" seem to be no longer in charge. Mean reversion is biznatch! Good luck my friend.
Yeah, you're right, there was nothing in my methodology that indicated I should close, and I missed another leg down, but like most of us I needed a 1/2 day off. As I said in another post, the Bernanke 'put' has perhaps become a 'punt', so that means we may have the ball for a series or two.
We bounced right off the 100 DMA. I am not sure it if it will hold. Will assess today's action and re-evaluate on Monday.
I did exactly the same, but I sold only one out of three short positions I wanted to sell. Just as I was done, they started recovering. But that's okay - after the trade settles I will buy some other, recently very heavily discounted items...
Recovery summer rolls on
Doesn't look like anybody is fleeing to the "safety" of treasuries this time Ben.
In other words, fuck you, Ben, and your low interest rates.
Homebuilders said just the other day how "confident" they are.
Guess they saw the Light. Even zero down mortgages don't work when you have no job, no assets and $60,000 in student loans.
stocks do not equal reality. Homebuilders aren't aren't falling because of fundamentals. it's just a trade.
"Homebuilders aren't aren't falling because of fundamentals."
They rise and fall based on housing finance. I think even a complete fucking idiot could understand this.
Now, what is housing finance based off of?
http://www.bloomberg.com/quote/USGG10YR:IND
And how are the housing financiers doing?
http://www.finviz.com/quote.ashx?t=REM
If homebuilders said they had a 2ft long cock, would you believe that too?
What goes up has got to come down sooner or later. I've got to give ZH credit for one thing. The MSM goes from positive to negative on a day to day basis. ZH has always maintained the same perspective, to the point I questioned the veracity of it a few tmes in the past.
Now I see that Tyler and his compatriots were and are right. ZH's consistency is sometimes shrugged by readers as the MSM touts how well things are and the market goes up, but when the MSM goes negative, readers flock back to understand why.
Because MSM is a popularity contest. That's what ratings agencies are about.... as society is dumbed down, the MSM has to follow in step to keep "value" in line with the societal stupidity. If no one watches, ratings fall. So stupid shit needs to be aired to keep stupid people happy.
"On a long enough timeline..."
The ZH motto...stay the course (even if you have to make things up, sensationalize non-stories, or disregard facts)
Becky Q
Is that you?
Tell me again how sound the US Economy is Papa, just one more story, please? Tell me again how everybody wants the privilege of using our dollar and loaning us money?
Yup. MSM is flavor of the day with no long term thinking about sustainability of trends.
The continued growth of total credit market debt globally, with accelerating government debt in recent years to mask deleverging in other sectors IS the problem. The world continues to delay market clearing by creating ever more debt. At some point, it has to end. What ZH or no one knows is timing, though it has to be clear even to Bernanke and other central planners that the jig is up. Though, I'm not sure Obama gets it or just doesn't care. He seems to think the US is rich enough to afford anything.
It's important that we allow the equity market to make this adjustment while interest rates move up to reflect the growth taking place in the underlying economy. This is to be expected in free markets where assets flow to the areas of the market that will benefit from the increased purchasing power of the consumer.
I am certain that nothing will come along and disrupt this theme.
Increased purchasing power of the consumers that matter: JPM, Citi, Morgan Stanley, BofA, Blackrock, Goldman Sachs, Deutsche Bank, Bank of England, IMF, ECB, the Rothchilds, the Rockefellers, etc.
Increased purchasing power of the consumers that don't matter: you, me, our next door neighbors, people who post on ZH, people working multiple part time jobs, people who rely on their 401Ks, people who have to face inflation at the grocery store and gas pump, etc.
I would give you +10 if I could, Fonz.
Sorry fonz, the consumer hasn't been the recipient of the goodies being handed out, so how will he support the economy that just keeps getting more top heavy? I don't see it. Maybe you believe the crap about 1% inflation rate, but I don't see that either. And free markets? Really?
+1 for the tannin laden sarcasm.
Fine bouquet, Cabernet?
MDB is that you?
Bernanke must be fucking thrilled about how strong he managed to make the economy on Wednesday. Puzzled as hell, but really thrilled at the daily evidence of the positive impact the FOMC meeting had. Maybe they can chat again on Monday and 'strengthen the economy' to a 4% 10 year, that will do wonders for the interest expense of the government, not to mention the value of the FED's balance sheet.
had to down u fonz. Your sarcasm is getting too frequent and too thick. Perhaps its medecinal for you but not for me.
Looks like the rats are starting to get the sinking feeling... Can't wait til they jump ship and start swimming towards the only safe haven.
All bubbles have in common free money being handed out. In the dot com bubble, free money was given to 'entrepreneurs' for website companies with no revenue and massive losses. Free money was given to people to buy homes right after that. Now, we're in the ultimate free money bubble. ZIRP, QE, free money for cell phones, food, cars, houses, healthcare, education and a million other goodies.
It all ends when people wake up and realize there is no tooth fairy with free money.
2.47%
Maybe we are in for a kabuki theatre 2.50% close? I thought these guys were hitting the beach early.
2.5 already. Btw, I swear I heard Gross yelling "FU. I hate you. FU. I hate you" out the window for about 45 minutes straight this AM... Work down the street from their Newport HQ. I wonder whom he was yelling about.
Perhaps we know why Gross has been buying up all those properties the past few years. He is retiring very soon.
Sorry to be a broken record, but I think some of us here are not fully contemplating just how completely fucked things will get above that 2.5% 10 year rate.
Things that will enter the common lexicon in short order:
Interest rate swaps
Eurodollar
Span margin
Yield curve
Sweeps
Money Market Mutual Funds
There is so, so very much leverage tied to that 10 year rate, that is already starting to blow up. Yes, the shit that is normally as boring as watching paint dry is going to get real, real exciting soon.
Study up, this is a surprisingly good overview of all the fucking crazy shit out there.
http://www.cmegroup.com/trading/interest-rates/files/understanding-eurodollar-futures.pdf
the 10 year is getting that much closer to the important 2.50 mark.
will we see the selloff intensify if it hits those levels?
Stocks left alone at open and then miraculously at about 1030 they start reversing. No great news as the reason just blatant manipulations. The sell off we had over the last couple of days was orchestrated for one reason...take down pm's and energy. It is interesting how, especially with pm's, they fell much more than stocks. This has happened quite a number of times. One reason... the big boys know that there can be no 'recovery' with high energy prices.
Nothing unusual. Shorts cover and take profits and then take it down again.
Right....and it is a 'real' market too. Farcical.
Pretty bearish.
Look at the dollar go.
Can you imagine the housing market late Summer into Fall if rates go up another 0.5% or 1%?
UGLY.
Well, I would think those fund managers who need 'good quality capital' would be stepping up here to BTFD in the treasury market, come on you guys, these things are a fucking STEAL at this price, don't you think? Act now, before China and Japan buy them all out from under you!. LOL- Stupid fucking excuse for a market, it's as dumb as that 'the US is bearing the burden of consumption' shit that was being tossed around in 2007 before reality reared its ugly head for the first (but not the last) time.
Long way to go yet. The Dow is still postitive on the day. Another 300+ point drop today then we might be seeing an unwind, as of yet, this is just a ripple in the water.
Slipping away as you type. Now negative. But in any case, equities are incidental (except that they make a good talking point for the pimps on CNBC). Bonds are where it's at this round, and they look like shit.
You just can't take your eye off this market for a second, can you?
By the time I type this, its possible it will be green again. Volatility be damned!
You may want to increase your sample set beyond the few stocks they can't afford to liquidate.
I can't decide which makes me laugh harder...the "Untwist" or the "Uncarry".
Gotta get Kurgman to do a Pomo dance, Pomo dance, Pomo dance.
Gotta get Kurgman to do a Pomo dance all the live long day.
With his Abe diaper on and his Bernanke in hand. A little girl giggle and fake hissy fit.
All the livelong day.
Hasn't the 10-year yield gone up like 25% over the last week or so?
If that would correlate to stawks, then the S&P would be in the 1200s.
Amazing that it isn't, huh? Or not.
10 year T-Bill at 2.507%!!!!
Can you say "massive unwind"!?!?
Stronger by the fucking minute, this economy.
It's starting to drop again (back to 2.48 at the moment). I wonder if staying above 2.5% would even matter or if it would need to hit something like 2.8% or even 3% to really matter...
It started to "matter" when the 10Y yield went over 2.25%.
Don't kid yourself.
Rising interest rates = rising deficit
Higher interest costs will consume and larger and larger share of tax revenue.
And it will eventually lead to rising consumer debt defaults, too.
We're just getting started.
And look at Eurodollar futures!
NOMO POMO
Europe was elated that it had created ANOTHER bailout! Wall St was congratulating them, until another dose of reality began to set it.
Europe is just socializing the costs of big bank bad bets and bailouts! This is NOT going to be pretty!
He's crushed paper gold and destroyed the housing market while at it. Congradulations you bearded clutze. What is next?
The whole idea here is to begin a market downturn in stocks, bonds, commodities and the housing market. This will get the politicos and public screaming for more QE and voila the FED will kindly oblige, just like the banks want. Those who are predicting hyperinflation will see it come true.
BTFD MFs
Not being a trader I was interested when all the excitement over the Spanish and Italian ten year bond started to approach 6 or 7%.If people are getting excited (PANICKED) here in the US over a 2.5% 10 year,doesn't that mean things are in much worse shape here? Also,what does this mean to all those crap MBS collateral the FED bought up? If they were shitty before,does that make them shittier now? Also won't this increase the flight to gold worldwide regardless of the downwards-manipulation? Margin calls anybody? All of this because Ben hints that the free money days might be tapering?